AI-Enabled Personalization and Consumer Trust: An Exploration of the Ethical Considerations in the Modern Marketing Environment Utilizing Data

Abstract

Abstract This chapter discusses the complicated AI-powered personalization and consumer confidence in the emerging scenario of data-driven marketing. With marketers taking advantage of artificial intelligence (AI) to provide hyper-personalized experiences, data ethics, transparency, and user consent concerns have come to the fore. This study uses a mixed-methodology allowing the researcher to triangulate quantitative data, collected in a 500 consumer’s survey in the United States and the United Kingdom, with that of qualitative data obtained through 20 semistructured interviews with marketing experts. The results reveal that AI personalization deeply increases perceived relevance (beta = 0.74, p < 0.01) and consumer engagement (beta = 0.69, p < 0.01). Nevertheless, trust relies strongly on the perceived transparency (beta = 0.62; p < 0.01) and good data habits (beta = 0.67; p < 0.01). Interviewees recognized the need to utilize explainable AI and explicit consent models to ensure confidence of the consumer. This chapter gives a conceptual approach to ethical AI personalization and offers practical implications to marketers who intend to use personalization to maintain a balance between the challenges of data stewardship and personalization.

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